Question
Bakers F., Inc. is at a crossroads where the executives have to decide between two scenarios for the firms future. Scenario 1 foresees an acquisition
Bakers F., Inc. is at a crossroads where the executives have to decide between two scenarios for the firms future. Scenario 1 foresees an acquisition of new business unit A, which will increase the current Revenue by 10%, Net Earnings by 8%, Total Liabilities and Total Equity by 5%. Scenario 2 foresees the acquisition of new business unit B, which will increase the current Revenue by 16%, Net Earnings by 5%, Total Liabilities and Total Equity by 8%. Conduct an analysis using the Du Pont Formula and make a recommendation on how to proceed. Please round the percentages and indicate direction with a "+" for an increase and a "-" for a decrease. For example, enter a 3.7% increase as "+4". For Scenario A, the Net Margin changes by Question Blank 1 of 7 %, the Asset Turns change by Question Blank 2 of 7 % and the ROA changes by Question Blank 3 of 7 %. For Scenario B, the Net Margin changes by Question Blank 4 of 7 %, the Asset Turns change by Question Blank 5 of 7 % and the ROA changes by Question Blank 6 of 7 %. For that reason, I recommend to proceed with Scenario Question Blank 7 of 7.
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